Adverse selection in insurance requires that
a. all people face the same risk
b. potential customers facing more risk are no more interested in purchasing insurance
c. people are not risk averse
d. insurers cannot tell higher risk people from lower risk people
d
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What is the difference between a money price and a relative price? When the demand and supply model predicts that the price of coffee will rise, is the model predicting that the money price rises or the relative price rises?
What will be an ideal response?
During the period of rapid industrialization in the U.S. after the Civil War,
(a) real farm incomes fell drastically. (b) real incomes in the agricultural sector increased at a faster pace than real incomes in manufacturing. (c) real incomes in the agricultural sector increased at relatively the same rate as real incomes in manufacturing. (d) real incomes in the agricultural sector increased but at a slower pace than real incomes in manufacturing.
The marginal cost of collecting information:
A. is independent of the amount of information that has already been acquired. B. is now zero because of the Internet. C. falls as more information is collected. D. rises as more information is collected.
Which of the following companies was broken up by the government?
A. Standard Oil B. Office Depot C. Wonder Bread D. Southwest Airlines